Financial regulators in China have asked state-owned banks and enterprises to audit their assets and report all financial exposure to Alibaba fintech affiliate Ant Group, Bloomberg reported on Monday.
The National Audit Office, which audits the revenue and expenditure of state institutions, issued the call alongside multiple governmental bodies, including the top watchdog of banking and insurance institutions, the China Banking and Insurance Regulatory Commission (CIRC), Bloomberg said. Financial and business entities under their jurisdiction must review and report their ties with Ant Group as well as its subsidiaries and shareholders, according to the report.
While regulators have not explicitly stated the reason for this recent mandate, the new round of scrutiny echoes a probe into links between state-backed financial institutions and private firms, including Ant Group and Evergande, in October 2021, aimed to curb extensive capital expansion, according to a report from the Wall Street Journal.
As the largest shareholder of Ant Group with a 33% stake, Alibaba Group saw its shares dive by more than 5% by 11:15 a.m. in Hong Kong on Tuesday, edging near its all-time low.
After Alibaba Group, two private equity firms hold significant stakes in Ant Group. Hangzhou Junhan Equity Investment Partnership controls 29.86%, while Hangzhou Junao Equity Investment Partnership has a 20.66% stake, according to business data aggregator Tianyancha.
The ranks of Junhan and Junao’s partners are mainly filled by the 18 original founders of Alibaba, information on Tianyancha shows. Most of these individuals are now top executives of Alibaba Group.
Several state-owned entities are also shareholders of Ant Group. The National Council for Social Security Fund (SSF), a sovereign wealth fund, held a 2.94% stake as of October 2020, according to Ant Group’s prospectus filed with the Hong Kong Stock Exchange ahead of its scuppered IPO. State-backed insurance companies China Life Insurance and China Post each hold slightly over 1% in Ant.
Last month, China Cinda Asset Management abandoned plans to raise its stake in Chongqing Ant Consumer Finance, a subsidiary of Ant Group, from 15% to 24%. The company said it had decided “not to participate” in the share subscription after “further prudent commercial consideration and negotiation with the target company” without directly mentioning Ant Group.
Throughout the crackdown on China’s tech-empowered companies, Ant Group has arguably been the most impacted. Its USD 34.5 billion IPO was shelved in late 2020, and Ant had to unbundle its consumer loan services, Huabei and Jiebei, from Alipay, which had over 658 million monthly active users as of September 2021.
In addition to the crackdowns and further investigation into the Alibaba affiliate, Ant Group must now share its users’ credit records with China’s central bank. The data will be used to build a national credit scoring system.